Knowledge acquisition

SonOf

Deleted_User wrote: »

“If you look at the curriculum of a typical IFA course, most of what they learn is focused on rules and best practices for selling and would be irrelevant”

That is incorrect.

What is correct is that the qualifications include suitability and advice. That is logical and sensible. However, nothing covers selling.

Training takes a few months, A-level maths is not a prerequisite, let alone advanced statistics. Exams are multiple choice tests and take a score of 65% to pass. A little underwhelming.

Why would an adviser need an advanced statistics qualification? It doesnt fit with the vast majority of the job.

I don't believe the hours of the combined exams would equate to 6 months in the real world. Whilst it is entirely possible (we have a chap with an economics degree who is sailing through them quickly) it is more likely it will be done over years whilst learning on the job. We have another one that is doing them over 5 years because they have to earn a living at the same time and cannot afford to spend 6 months passing 8 exams as that would be a full-time education course with a focus on just passing the exams rather than actually learning. By learning on the job and taking it steady, they will learn more about giving advice and suitability then some blitz through the qualifications.

I actually think that the degree student sailing through the exams won't be as good an adviser as the one taking 5 years to go through them. Mainly as he is more academic minded and lacks real-world understanding and common sense. At this time, he would make a better compliance officer and researcher to be used by the other advisers in the firm.

Exams do not give you the skills to succeed. There is far more to it than that as any employer will tell you.

The banks used to blitz people through qualifications and look what happened there. Nowadays, the most common route is for new advisers to become mortgage and insurance qualified and learn investment class on the job or to become assistants to IFAs and learn whilst doing that. There are not many salesforces left nowadays that will take on untrained people. So, the blitz route is not commonly used any more.

So is it true that if you see an IFA displaying DipPFS after their name it's effectively these CII qualifications/ accreditations?

The regulatory requirement is level 4. So, DipPFS is what you expect to see to show they are qualified. There are also a range of level 6 qualifications and most IFAs will have a combination of level 4 and level 6 exams. Some will have enough level 6 exams to refer to themselves are chartered. For the average consumer, chartered is overkill and usually comes at a higher cost. However, for those with complicated affairs, chartered would be desirable.

In case you don't know what levels refer to, level 2 is equivalent to O Level. Level 3 is A level. Level 4 is a diploma. Level 5 is a foundation degree (surprisingly, no level 5 options exist in financial services qualifications). Level 6 is a degree with honours. So, most IFAs that have level 4 obtained and some level 6 qualifications are on their way to a degree with honours.

happyandcontented

What is the name of the additional qualification which is required to advise on DB pension transfer?

SonOf

Sunnylifeover50plan wrote: »

I think it's my assertiveness which is exposing a weakness in my IFA - maybe they skipped that particular module.

What sort of questions are you asking them?

In the past on this site, we have seen suggestions of questions you should ask an IFA. Some are sensible and correct and some are joint pointless and daft. Some are just mentioned as the person posting knows they are unnecessary and will just wind the IFA up.

We had an example before Christmas where a client who thinks he knows everything but knows nothing asked a whole range of questions that a) could not have been thought of by him and b) just confirmed that he really doesn't know what he thinks he knows. I have been encouraging the adviser in question to end servicing with that client because the "know it all but knows nothing" style client combined with a rather obtuse and combative attitude often ends badly. We often refer to these type of people as Daily Mail readers. i.e. they saw it in the DM so it must be right.

It is one thing to ask questions because you don't know and need "educating" (for want of a different word). It would be unlikely that an IFA would fail to answer questions in a positive way unless they felt the relationship was sour and the questions being asked are driven by an ulterior motive.

Indeed, most IFAs want questions to be asked as its good audit trail to document those questions answers and it shows that the client has invested their time in the process. Those that invest time in the process are less likely to cause problems later on because they made an effort to understand. e.g. the person who clearly understood that crashes come is a) less likely worry they happen and b) less likely to complain. They are also more likely to value the advice service too.

SonOf

happyandcontented wrote: »

What is the name of the additional qualification which is required to advise on DB pension transfer?

There are several but AF3 and G60 are commonplace. The CII is the largest of the accreditation bodies.

[Deleted User]

Why would an adviser need an advanced statistics qualification? It doesnt fit with the vast majority of the job.

True. Assuming advisor’s job does not involve trying to understand how some of the funds he recommends are designed. Like a car salesman does not NEED to know what words “V8 engine” actually mean.

Linton

Deleted_User wrote: »

True. Assuming advisor’s job does not involve trying to understand how some of the funds he recommends are designed. Like a car salesman does not NEED to know what words “V8 engine” actually mean.

A rather inappropriate comparison. How about an IFA not knowing advanced statistics is a bit like a car salesman not knowing about ignition temperatures and turbulent fluid flow?

[Deleted User]

I do not agree that fundamental education isn’t important. A shamanic healer may have decades of experience but I’d rather go to a doctor.

And yes, I have trouble taking seriously any advisor recommending active investments who does not understand positive correlations or event trees. Experience of someone who has successfully sold investment products for many years is certainly impressive; just not necessarily in a way thats particularly helpful.

One of the best ever books on the subject is called “Random Walk [down the Wall Street]”. There is a reason for that title. An average IFA wouldnt have a clue where the title is coming from, let alone the contents. Are they really qualified to be in charge of my hard earned money?

[Deleted User]

Linton wrote: »

A rather inappropriate comparison. How about an IFA not knowing advanced statistics is a bit like a car salesman not knowing about ignition temperatures and turbulent fluid flow?

No. Ignition temperature isn’t what makes Mercedes different from Trabant. Active Funds using quantitative approaches differ between each other and with other funds because of the statistical basis of the approaches they use to manage risk and pick stocks.

Linton

Deleted_User wrote: »

No. Ignition temperature isn’t what makes Mercedes different from Trabant. Active Funds using quantitative approaches differ between each other and with other funds because of the statistical basis of the approaches they use to manage risk and pick stocks.

How many funds are quant based? Presumably the risk managed multi-asset funds are but the average fund would appear to operate on more traditional investment techniques. But neither an investor nor an IFA need to know the maths which must be commercial secrets anyway. All that matters are higher level factors such as the nature of the fund (eg is it risk managed, allocation based, reliant on stock-picking etc), the assets it which it invests, its objectives, and its success in meeting them.

[Deleted User]

Linton wrote: »

How many funds are quant based? Presumably the risk managed multi-asset funds are but the average fund would appear to operate on more traditional investment techniques. .

No. Not about multi-asset funds. I would guess that most active funds on the market today use quant techniques and try to remove or minimize known problems associated with the decision making and behavioural issues of human managers. Could be wrong on most, but it’s certainly a lot and nothing to do with the number of asset classes.